Disciplined Buying

A seasoned real estate investor cautioned me early in my career not to fall in love with a property.  His sound advice continued; “make thoughtful market based buying decisions, keep emotions in check and have a short and long term plan”. Unfortunately, during this last frenzied market some buyers did not adhere to this wisdom; particularly the advice about making sound market based buying decisions. 

In 2003-2004 Main Street storefronts with no parking sold for more than $300 per square foot and then were leased to tenants paying rental rates well below what this purchase price demands.  Land on U.S. 41 between 4th Street and Fruitville Road was purchased at prices no allowable development project could support, and downtown historic buildings were purchased and renovated at costs far exceeding what the market will support.

Click here to download the PDF of the Spring 2006 newsletter

Downtown Office Rental Rate Changes!

Over the past five years leasing downtown has been the “best deal in Sarasota real estate.”  While still a good deal, downtown office lease rates have jumped up—making leasing downtown less of a GREAT deal.  Offices rates are, for some properties, reaching $30 per square foot.   The best deal remains leasing high-rise office space in one of the several buildings built in the 1980’s.  Rental rates for class “A” office are $21-$26 per sq ft full service, but expect these rates to increase as very low vacancy rates persist.

Downtown Offices For Sale!

Coming to the downtown is The Atrium on Ringling – a mixed-use development with 45,000 square feet of office condominium space.  Location, Location, Location and Parking, Parking, Parking are the hot points for The Atrium which is conveniently located just west of Osprey Avenue on Ringling Blvd and offers a generous 4 per 1,000 sq ft parking ratio.  But there is more! Open floor plans, dramatic views and classic design.  Expect occupancy late 2007.  Call 951-2002 for more information.

Industrial Value Increases!

Demand for I-75 corridor industrial properties has led the market and now demand is driving U.S. 301 corridor industrial prices to new levels.  Northgate buildings have sold for as much as $92 per square foot  while newly constructed flex-space condos sell for $130 per square foot.

Click here to Download the PDF of the Spring 2005 Newsletter

Oh the Market!!!!

Fueled by strong national economics featuring low interest rates, low unemployment, weak dollar and baby boomers desiring comfortable retirement locations; the real estate market has sustained feverish activity and record setting prices for three years.  There is much discussion comparing this real estate cycle to the stock bubble in the late 1990’s.  Locally, the more reasoned discussion speaks of a leveling of real estate prices rather than a bursting of a bubble connoting value deflation.  Predictions of when the leveling will occur, range anywhere from one to five years!  What does this tell us?  The demand will remain strong but prices are reaching an apex and will limit out. 

Downtown Condo Prices Hit the Ceiling.

The market is defining the downtown residential condo price ceiling at around $850,000.  Condos priced higher than $850,000 remain on the market for longer than the sellers would like because supply outweighs the immediate demand.  Assuming the $850,000 market ceiling to mean that multimillion dollar condos don’t sell would be incorrect.  In the right locations multimillion dollar condos do sell.  It simply means that there are fewer buyers for the top priced units.   A quick look at the profile of the typical downtown condo buyer and we see the reasons for the price ceiling.  Approximately 70% of the buyers are purchasing condos as 2nd, 3rd and 4th homes, they are adult households and the units being purchased are less than 1,800 sq. ft..  Over the years the profile of the buyer has not changed much, but now there are more buyers with more money.

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Is this market sustainable?

This real estate market is truly incredible! Residential condominium sales from $400 to $800 per square foot are the norm rather than the exception, office buildings sell for over $275 per square foot, and industrial buildings sales surpassed $70 per square foot. Who would have anticipated this market and are prices going to continue to rise? Forecasting out  nine months, we can expect continued strength in the real estate market. We can also expect sales prices to continue to increase as demand remains strong, interest rates remain low and the economy remains solid. Thinking of selling your commercial real estate? Should you sell now or wait? No one can pick the top of the market, but if you are thinking of selling, this is the best time to be a seller.

Inflation?

There is talk of inflation particularly when the conversation is focused on the increasing prices for fuel, concrete and steel. The big picture tells us that product prices often fluctuate, basic economic indicators are inline and the national economy is healthy and growing. Now real estate prices have increased dramatically over the past 4 years, but are real estate prices inflating or are they simply appreciating? Well, that depends on if you are a buyer or seller.

Forecast 2004!     

Can the market get any better? This question is on the minds of active real estate brokers.  Well, maybe not too much better but expect 2004 to be another bright year for the real estate industry.  Expect high market activity, low vacancies, quick sales and higher prices, all good news for sellers and landlords.  Interest rates continue to drive the market, but in 2004 the Florida market will be energized by the favorable national economy and buoyed by an active tourist season.  If you are buying this year, act quickly because others will be poised to seize your opportunity. 

Residential market continues to surge.

Clearly, residential is still the hottest real estate market around.  Single-family and condominium sales are keeping residential real estate brokers happy as historically low interest rates have enabled buyers to afford  higher priced homes.  However, positive home sales have taken a bite out of the apartment market as tenants are purchasing homes.  The result is the highest apartment vacancy rate in 10 years — 15% to 12%— depending on the product and market. 

Real Estate Bubble?

Across the country, real estate has been the shining light in an otherwise lackluster economy.  Historically low interest rates have created buying opportunities where none existed, and all market sectors are experiencing new highs in sales prices and activity. Many tenants are now buyers—creating demand and increasing prices to record levels reminiscent of the tech stock bubble.  As long as interest rates remain low and stable the bubble should not deflate.

Fruitville Road east of East Avenue takes off

The face of Fruitville Road east of downtown is finally evolving from sporadic residential to a future of low intensive office and community service headquarters.  The transition will take about three years, but by 2005 the change will be dramatic.

Why the wait?  The 1980s city plan for Fruitville Road required a minimum of one-acre lots for rezoning to office use. In the 1990s, the code was modified to permit smaller lots for office use. The revision addressed difficulties with assembling parcels, as well as a key market factor: Our business community is predominantly made up of companies with five or fewer employees. Smaller companies need smaller facilities, requiring smaller land parcels. The code adjustment makes redevelopment and in-fill a realistic opportunity along Fruitville Road.

Real estate maintains investor interest during economic downturn.

The fluctuating stock market pushes interest and confidence to   real estate.  The recession we have been experiencing and subsequent downturn in leasing have not clouded investors’ vision. They recognize that the recent appreciation of real estate and stabilized vacancy rates are signs that the recession will be short-lived. Confidence in real estate as a sound investment is buoying real estate markets, and sellers are pressing for higher prices.